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The shipping industry was already suffering before the current economic sanctions imposed on Russia for their invasion of Ukraine, due to Brexit and COVID-19. The industry has been facing a shortage of vessels and containers when the sanctions meant an increase in the prices.
In less than a fortnight, shipping rates have risen tenfold for container prices, and premium prices have already risen by 5%.
On Thursday, Brent crude oil approached a multi-year high of $120 per barrel and was slightly lower at $113 on Friday. On 3 March, the Drewry’s composite world container index was up 2.1% from last week to $9,279.46 per 40ft container.
It was said, by Anil Devli, CEO of the Indian National Shipowners’ Association (INSA), that daily rates of tankers and vessels have zoomed from $3,000 per day to $30,000-40,000 in around 10 days, primarily because there are fewer ships from Russia and Ukraine. He added that war risk premiums for ships have also increased by 3-5%.
“In terms of insurance now, war risk premium (on insurance) has gone up. When you are going into a country that is somewhat ‘war-risk’, then you pay a premium over and above the war risk premium that you generally pay. Then you pay what is called an additional war risk premium. So, the war risk premium has gone up dramatically," Devli said, adding several foreign vessels are stuck around the Black Sea and the Sea of Azov.
Chairman of Total Transport Solutions Ltd said “in the past week, shipping lines were not accepting cargos for Russia, but some carriers are now accepting them. However, the freight levels are three times high now. A 20 feet container that used to be $6,000 for St Petersburg from Nhava Sheva has now gone up to $17,000-18,000 per 20 feet container,"
Rates are not expected to calm down any time soon.
If you have any concerns regarding the current rates of shipping, please get in touch.